Thesi’s soapbox questions for Ken Brinsden, page-41

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HCGhost

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20/10/16

21:59

Post #: 20013614
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Originally posted by Pizzas4 ↑

But higher price does not indicate a bubble but rather could indicate a change in either demand fundamentals or elasticity of demand or both. What it cannot indicate is increasing supply as that would constrain price growth.

In both demand cases, in the absence of increased supply above the new equilibrium, upward price pressure is exacerbated.

Until there is significant supply above the new equilibrium in the absence of a change in elasticity still no bubble occurs and price can continue to move upward.

And you haven't considered the math for exponential demand growth caused by disruption.

Try plotting LCE price over the last three years and the assume demand and supply in balance at each point. In an opaque market the best I can do sorry.

Now join the dots calculate the gradient at points along the curve, and express algebraically.

Plots are likely to be moving toward an exponential growth curve which is what you would expect. In such a case until supply can catch up, prices will continue to rise or, with supply limited, alternatives will be sourced.

However in this case, the alternatives will also rise in price unless there is limited capacity for product substitution.

The key take out is unless you can substitute (Vanadium or alternative battery tech) price can continue to rise.

Higher cost producers will be profitable until supply exceeds demand for a considerable time due to shifting patterns of demand and the bring scared an imbalance will occur again (irrational behaviour), every body fights to lock in supply.

In fact lower quality ( say 5% or 4% grade, sound familiar) will be acceptable to keep factories running to protect capital investment from being written off.

Say you power all the machines in the world by a product like say oil. If you control supply then without an economically valuable substitute you can charge whatever you like. Oil has always been abundant just not economic to produce. ask Russia and the high cost producers now!.

Now think of a world full of lithium powered engines and limited supply and no substitutes.

We could call it LIPEC. Lithium producing export countries.

Eventually 0.2% spodumene grades will lower the price but because there are no longer petrol stations you pay the price.

Eventually this will cause a bubble. So without specifying a timeframe the bubble scenario wil not stack for some time to come IMO.

And where was the oil price bubble before each was a price shock where supra normal profits were made.

Ok then you can have your bubble! But not until after we have made the supra normal profits!

DYOR IMO GLTAH

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"lithium powered engines"

No such thing. There is no energy to be won from lithium and unlike oil it is not lost when it is consumed. Lithium is simply just one of a number of raw materials in batteries, that will eventually be substituted out for other materials that provide higher energy density.

PLS Price at posting: 47.0¢ Sentiment: None Disclosure: Not Held
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Thesi’s soapbox questions for Ken Brinsden, page-41

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